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  • Changes in the Judicial Opinions on Trademark Coexistence Agreements

    Changes in the Judicial Opinions on Trademark Coexistence Agreements

    If a trademark for registration is identical with or similar to another party’s trademark which has been registered or preliminarily approved for use on identical or similar goods, the Trademark Office shall reject the application, as stipulated in Article 30 of the “Trademark Law”. In practice, it is very common that a trademark for registration might be rejected for such reason.

    Where the applicant has used a trademark for a long period, or has spent a large amount of manpower and mone in the promotion, or for other similar reasons, the applicant would try to register such trademark by applying for a trademark review or even administration litigation. Under such circumstance, many applicants may try to enter into a trademark coexistence agreement, or obtain a trademark coexistence approval (hereinafter collectively referred to as the “TCA”), with or of the cited trademark owner.

    Generally speaking, the Trademark Office has different opinions with the court on the effectiveness of TCA.

    In 2007, after analyzing the relevant issues related to TCA, the Trademark Appeal Board affirmed that a trademark which has been registered or preliminarily approved shall be protected, which is one of the legislative purposes of Article 28 (Note: Article 30 of the revised law) of the “Trademark Law”, so it is not proper to deny the effectiveness of TCA. In addition, to protect the interests of consumers and preventing confusion, which is not only one of the legislative purposes of Article 28, but also the legislative purposes of the “Trademark Law”, so the effectiveness of TCA shall be decided by considering whether both trademarks could be distinguished by consumers, and whether TCA may confuse consumers. Therefore, the Trademark Appeal Board emphasized that TCA shall be considered with 2 factors: (a) the degree of similarity of both parties’ goods and the 2 trademarks, the famousness of the 2 parties; (b) the famousness of the 2 trademarks. In practice, the Trademark Appeal Board has seldom approved TCA.

    However, the opinion of the courts on TCA is very interesting. In the case for trademark “良子”, Beijing No. 1 Intermediate People’s Court upheld the decision of the Trademark Appeal Board; Beijing High People’s Court overturned the decision of Beijing No. 1 Intermediate People’s Court in (2009) Gao Xing Zhong Zi No.141 Administration Judgment; Supreme People’s Court upheld the judgment of Beijing High People’s Court in the retrial in Nov. 2011. Supreme People’s Court pointed out that the result of revoking the disputed trademark clearly broke the balance of interests agreed upon in TCA, and the market structure formed over the years, which was obviously unfair to Shandong Liangzi Company. This is a turning point. In the later several years, there are several cases in which the second instance courts overturned the judgments of the first instance, and confirmed the effectiveness of TCA. For example, (2011) Gao Xing Zhong Zi No.1717, (2013) Gao Xing Zhong Zi No.958, (2014) Gao Xing (Zhi) Zhong Zi No.3024, and so on. Those judgments emphasize that, (a) the cited trademark owner has the right to manage the registered trademark, such as authorizing the registered trademark in a TCA, and this is a private right; (b) TCA is the important basis on judging whether the trademarks are similar or is it possible to confuse the public; (c) there is no evidence to prove that the cited trademark owner issued TCA would cause damage to the interests of the relevant public. In addition, if the applicant and the cited trademark owner are affiliates, it is more possible for the court to affirm the effectiveness of TCA.

    However, from the end of 2015, to 2016, the opinion of the courts has changed again. The courts had different emphases on the respect of private rights and the protection on the consumers’ interests. For example, in (2015) Jing Zhi Xing Chu No.4950 judgment, Beijing Intellectual Property Court pointed out, “in a trademark infringement proceedings, the accused infringer could obtain an infringement exemption as long as he has the permission of the right holder. But the right holder shall not cause damage to the public interests while managing its private right. In the confirmation of the authorization of the registered trademark proceedings, if the applicant or the latter trademark owner could register a trademark with a TCA, then the value of the review on the authorization of a registered trademark would be vanished. Therefore, TCA could be taken as a reference while analyzing the possibility for arousing the consumers’ confusion, instead of the basis for approving the subsequent registration of a trademark. If TCA could not eliminate the possibility for arousing the consumers’ confusion, then TCA might damage the trademark identification function and the consumers’ interests, which is an abandon of the legislative purpose of the ‘Trademark Law’.” It is interesting that in the “蓝鸟” case in Apr. 2016, Beijing High People’s Court chose the opinion before 2015, which emphasized the respect for private rights in (2016) Gao Xing Zhong No.1597. But in the ”艾格福” case in Oct. 2010, Beijing High People’s Court chose the opinion after 2015, in (2016) Gao Xing Zhong No.3683.

    For the recent two years, the opinion of the courts tends to pay more attention to the interests of consumers, and the courts would analyze the possibility of confusion with TCA. The basic opinion is that if the goods are the same or similar, the difference between the 2 trademarks could not be clearly identified, even both parties have signed a TCA, the subsequent trademark shall not be registered. For example, (2018) Jing Xing Zhong No.257, (2018)Jing 73 Xing Chu No.4435 and so on.

    In summary, if an applicant plans to obtain a trademark by using TCA currently, it is recommend to confirm the following key points: (a) whether there is a certain difference between the trademark for registration and the cited trademark; (b) whether the owners of the 2 trademarks are affiliates; (c) whether TCA would cause confusion to the public, which might damage consumers’ interests. For example, if the owner of the cited trademark would not use it in the future, then it would not cause confusion to the public. If the answers to the above questions are affirmative, then the applicant could take TCA as the reason for the trademark review, in addition, it would be better to explain those key points in TCA.